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Why does Algorand have a minimum balance?

Algorand is a special asset that has built-in rules on minimum balances held in Algorand addresses, just like some bank accounts where you have to maintain a minimum balance. In order to activate and use your Algorand wallet, you must first deposit no less than 0.1 ALGO into your FEX Algorand wallet.

After that, your account will activate and everything will be just like you are used to with Bitcoin, Ethereum or any other FEX asset, except that the 0.1 ALGO minimum cannot be moved out.

Algorand official stance

The ALGO asset is unique in that, unlike other assets, Algorand enforces reserve requirements in order to keep the address active as well as protect the shared global ledger from growing excessively large as the result of spam or malicious usage.

Much like Stellar and Ripple, the Algorand network requires minimum balances on accounts in order to prevent people from overwhelming the network.

To submit transactions, an address must hold a minimum amount of ALGO in the shared global ledger. You cannot send this ALGO to other addresses. To fund a new address, you must send enough ALGO to meet the reserve requirement.

The current minimum reserve requirement is 0.1 ALGO. This is the cost of an address that owns no other objects in the ledger.

You can read more information on the Algorand reserve requirements in the official documentation.

How FEX handles ALGO minimum balances

Similar to how FEX requires a minimum Ethereum balance to exchange ERC20 tokens, or a minimum balance for Ripple, FEX also requires a small amount of ALGO to be stored in your wallet to remain in compliance with the Algorand enforced reserve requirements.

By default, a minimum balance of 0.1 ALGO is required, however for each Algorand token you opt-in to receive, the minimum balance will increase by 0.1 ALGO per token. If your ALGO address in FEX has less than this minimum balance, clicking on the “Receive” tab will display a modal (popup) with this warning to alert you of the situation.

Please note: You will not be able to send ALGO while the balance in your FEX wallet remains below 0.1 ALGO.

When exchanging other assets for ALGO, FEX will always make sure that you will receive more than 0.1 ALGO to ensure these account minimums are covered.

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